The real estate industry is both lucrative and competitive. Realtors in general spend well over 50% of their time looking for leads, often investing hundreds and thousands of dollars monthly with direct mail and other marketing programs, personal websites, search engine optimization, etc. In 2014 the real estate industry spent over $13 billion in advertising and marketing. Real estate makes up about 17% of the U.S. economy. Often they will buy leads from companies such as Zillow®, Trulia®, and numerous 3rd party providers of real estate leads spending anywhere from $50 to $1,000 monthly. Some of the top producing agents spend tens of thousands of dollars per month. Additionally, the quality of these leads, as expressed by the majority of users is generally poor and it's necessary to scrub hundreds to get a sale and finally the leads they get contain minimal information, typically a name and email address or phone number and at best a home address if the lead is from a homeowner considering the sale of their home.
The real estate industry has adopted best practices and specific processes for the payment of a referral fee from a referring realtor that has referred a client to another licensed real estate agent, whereby a referral fee is paid and dependent upon the successful completion of a real estate transaction. In order for payment of a referral fee to be lawful and enforceable it must comply with industry rules and regulations, state and federal laws, and contract law. Offer and acceptance are elements required for the formation of a legally binding contract: the expression of an offer to contract on certain terms by one person (the offeror) to another person (the “offeree”), and an indication by the offeree of its acceptance of those terms. The other elements traditionally required for a legally binding contract are (i) consideration and (ii) an intention to be legally bound. Offer and acceptance analysis is a traditional approach in contract law. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. Unfortunately there does not exist a way to programmatically generate, assign, qualify, process, and confirm the acceptance of a referral fee in the residential real estate marketplace such that a legally bound agreement is in compliance with all industry regulations, state and federal laws.
Another industry problem is the response time to get back with potential buyers and sellers of real estate after they have made their inquiry. A 2014 WAV Group study details lead responsiveness results from a sample of 384 different brokers across 11 states.
Researchers posed as consumers and inquired about listings on broker websites, Zillow.com, Realtor.com, and Trulia.com. The study revealed a staggering failure to serve the consumer as the study reveal that 48% of buyer inquiries received no response and where a response was followed up, the average response time with 15.29 hours. Finally, when consumers are asked about the one thing they would change about their traditional agent, they often respond with “faster response time from my agent”. Establishing communication between potential buyers or clients and REALTORS® is an industry shortcoming that if addressed would benefit both clients and realtors.
Additionally while there are hundreds of real estate mobile applications with billion dollar organizations such as Zillow®, REALTOR.com®, and Redfin®, none are capable of programmatically opening to a specific hyper local market trends report and other reports specific to the neighborhood boundaries. None are capable of programmatically changing not only the geographic data but also automatically assigning a realtor who is assigned to receive inquiries based upon the geographic location of a user. Finally, none are capable of systematically and programmatically tracking a potential buyer or seller of real estate through the entire end to end process starting with the referring licensed real estate agent through all direct and indirect client opportunities to a licensed real estate agent who becomes the agent for the buyer.
The buying and selling of real estate is heavily regulated by federal and state agencies, with regulations varying from state to state. However, all fifty states require a valid real estate broker's license in order to share in any real estate sales commission. Real estate sales commission fees generally range from five to eight percent of the purchase price. The commission fee is usually split evenly between two real estate brokers when the buyer and seller are represented by different brokers. A broker is entitled to the entire commission fee when a broker represents both the buyer and the seller.
Referring leads or potential buyers and sellers from one real estate broker to another is a standard practice within the real estate industry. A 25% to 30% referral fee is typically paid to the referring real estate broker out of the commission that another broker earns from a transaction. The commission and any associated referral fee can be earned on the buyer “side”, when the real estate broker closes a transaction while representing a buyer. Or the commission and referral fee can also be earned on the seller “side”, when the real estate broker closes a transaction while representing a seller. If a real estate broker refers someone who both buys and sells, the broker will expect a referral fee on both sides.
Referral fees are typically paid without the buyers or sellers knowledge. Moreover, referral fees do not have to be disclosed or appear on any closing documents. A referral fee is essentially one real estate broker sharing his or her commission with another real estate broker. Note that receiving a referral fee is a regulated activity and a real estate broker cannot share his or her commission with anyone who does not have a valid real estate broker's license.
Over the years, the real estate industry has realized that real estate broker referral fees are an opportunity for them to collect revenue that would otherwise be lost. Likewise, real estate brokers welcome paying referral fees, because the referral is more cost effective than the marketing dollars a real estate broker would otherwise need to pay to generate new customers. In addition, referrals are more likely to close a transaction and generate revenue than general marketing leads. In fact, nationwide statistics suggest that a real estate broker is eight times more likely to help a referral client buy a home than a lead that just calls into the office. Thus, referrals, both the ability to collect them and the willingness to pay them, are widely embraced within the real estate industry and have become a standard practice that is essential to business success.
Therefore, a need exists for novel consumer or client driven referral management system and methods. A further need exists for novel systems and methods that are configured to track, record, and audit referrals for the payment of referral fees that satisfies the requirements of both state and federal law. A need also exists for novel systems and methods that are able to provide quick response time between a seller and buyer of real estate and their agents. Finally, a need exists for novel systems and methods that are configured to provide adaptive real estate information using the location of a user.